|
OMINOUS
TRENDS: THE FOUNDATION IS CRACKING What does 2007 hold for us? We never can predict with 100% certainty what will happen tomorrow but we can recognize and identify trends that are in development now. So, what are the trends that just may shape 2007? Well, the US dollar seems to certainly be heading lower. The real estate market will continue its slide down hill. The slow eroding forces of inflation will continue just like death and taxes. American jobs will continue heading to Asia. And I believe resource stocks will continue to shine as the world shrinks further and its demand for raw finite materials grows. Also, the rush to find an alternative energy to replace oil consumption will grow with a great deal of intensity and nuclear energy will fill this need. So, where to put your money this year? Gold, silver and uranium. Those will be the top players for 2007 I believe. And gold is definitely in a win - win situation as the text below so well illustrates. Doug Hornig - “Looking ahead, Julian Phillips, analyst at Gold-forecaster.com, believes that, “Gold is showing a strength beyond oil or the dollar which will stand apart from these other markets … As we enter into 2007 we do expect to see rising volatility, uncertainty, tensions all sufficient to cause concern enough for gold and silver to become safe haven assets in their own right.” click So where is the gold price expected to range in 2007? “Gold prices in 2007 are forecast to average $670 an ounce, 11 per cent higher than the estimated 2006 average of $606, mainly on ongoing strength in investment demand.” click The email below is from Sanjay in India. Sanjay illustrates well the fact that the resource and gold bull market is continuing to gain followers ever day. Dear David, “Hi. I have just a month back started taking interest in precious metal trading.” “…I have decided to make small investments in gold and silver…” Sanjay Agarwal, India And uranium? Why so much talk today about the resource uranium? Well, read below and maybe the text below will answer this question. Is this demand for uranium a temporary rally and if not who is needing it? Kevin Kerr - “According to a report by the IAEA, 130 new nuclear power plants may be built in the next 15 years. Who are the big players? The usual suspects, of course: China, India, Europe, Russia, etc. Nuclear power provides about 16% of the planet's total annual electricity generation and 34% of the European Union's needs. Trust me, they need it - a lot.” “The president's State of the Union address was a rallying cry to uranium producers to get moving...finally, reality is setting in. The dwindling supply of oil and spiraling high prices of fossil fuels are driving interest in nuclear energy as the possible power source that will be used to meet current and future global demand.” click I wrote last week the following below. “So why should we even begin to suspect that they would take advantage of us now simply because they hold a 1 trillion mortgage over our heads today?” It’s simply ridiculous to assume that they are one day going to call in the mortgage they hold over this country. The truth be told I am sure the Chinese folk are trembling in their boots. The United States is economically invincible and will never fail. Just can’t.” Come on people! Give me a break here! I was being cynical! Dave, “Are you being serious or sarcastic here?” Sheldon S. Anyway, cut me some slack here. Some times the best way to get a point across is to state the opposite of the truth and it really does work because it forces people to wake up and think. And there is never anything wrong with thinking now and then. At least Jerome below was awake. “OOPS! Should have read the rest of the article! Didn't realize it was a sarcastic statement!” Jerome S. Carmelo writes from Italy below and informs us he doesn’t believe the USA is invincible. Dave, “I'm writing from Italy. I always read your articles and agree with them. This time however I do not. At one point you declare the U.S. can't fail. WHY? The Roman Empire fell, Tamerlane Empire fell, Alexander the Great fell, the Spanish Empire (the one where the sun never set) fail WHY AMERICAN CANNOT? ARE AMERICAN (7% OF THE WORLD POPULATION), LIVING WAY ABOVE THEIR MEANS “THE SALT OF EARTH"? American Empire (and economy) is already bankrupt. The only thing is few (so far) know it.” Carmelo Amenta, Italy Carmelo, all joking aside, I really do agree with you. Carmelo, I like your last comment. “American empire (and economy) is already bankrupt. The only thing is few (so far) know it.” I believe, as well as many others, that the US is stretching its military too thin today around the globe. Any student of history will see this event as further evidence that a major power is at the peak of its power when this occurs. “The concept of the army acting as a frontier defense force would have been incomprehensible and anathema to the Romans of the Republic.” “The Making of the Roman Army; From Republic to Empire”, Lawrence Keppie 100 years ago our military’s chief occupation seemed to be defending the continental US. But today the goal seems to be defending everyone else’s borders all around the world. This act in itself would have been incomprehensible to our founding fathers or the military a century ago. “…Roman forces became directly responsible for the defense of a growing proportion of the Empires boundaries, against threats whose intensity and direction they were increasingly unable to influence. But the fact that the army was changing to a static defense-force positioned on or near the borders of the Empire was not at first admitted.” “The Making of the Roman Army; From Republic to Empire”, Lawrence Keppie I like the above statement as it really hits the nail on the head with our own military situation today. “As the legions and auxiliaries became more static, and widely spaced, the problem of responding to particular threats became more acute.” “…to deal with emergencies points the way to the mobile field armies of the Late Empire…” “The Making of the Roman Army; From Republic to Empire”, Lawrence Keppie Wow! The U.S. is now developing its own “mobile” army today. Isn’t it amazing how history repeats itself even after 2,000 years? “…never do they take a break from their training or wait for emergences to arise.” “…every day each soldier exercises with as much intensity as he would in war.” “No confusion ruins their customary neat formations, nor are they paralyzed by fear, or worn out with fatigue.” “With such splendid planning and organization, no wonder that the boundaries of their Empire are in the east the Euphrates, in the west the Atlantic Ocean, in the south the new lands of Libya and in the north the Danube and the Rhine.” - Josephus the Jewish Historian. “The Making of the Roman Army; From Republic to Empire”, Lawrence Keppie So, if the Roman Army was so invincible why did the Roman Empire eventually fail? Economics primarily. The currency eventually became totally devalued and made worthless. Inflation grew and grew. A falling Roman dollar (sesterces) is what really brought down and destroyed this great power. See a comparison today with the US dollar? Hi Dave! “When the dollar collapses, the US will not be able to maintain it's military and it will revert to using nukes to maintain world order. Many countries now under protection will be threatened by hostile interests, and only nukes will deter invasions. What a mess!” Robert S. Isn’t it interesting how history repeats itself? Do you begin to understand the importance of recognizing and understanding trends? While understanding trends are no perfect road map they do help us to more appropriately plan our finances and long term investment goals. And what about that deflating real estate market here in the U.S? “A realtor's Web site says: "This project has been canceled and will not be built." “Developers have pulled the plug on some of Miami's most anticipated condominium developments…” “…the "for sale" signs are not the only warnings of a fading market. Statewide sales of existing condos dropped 31 percent in October from the same month last year, according to the Florida Association of Realtors.” “In Fort Lauderdale, sales dropped 21 percent in October.” "We're starting to see projects being canceled almost on a weekly basis," said Jack McCabe, chief executive of McCabe Research & Consulting of Deerfield Beach.” click That last line typifies much of the real estate market across the country now. “We're starting to see projects being canceled almost on a weekly basis…” The news text below is further proof that the US dollars reputation is slipping further and further downhill. “The US dollar bill’s standing as the world’s favourite form of cash is being usurped by the five-year-old Euro. The value of Euro notes in circulation is this month likely to exceed the value of circulating dollar notes…” “…the Euro took the lead in October.” click Is this for real? “The signs are that in December the (Euro) currency came of age by overtaking the US dollar in terms of the value of notes in circulation.” click Read the news below as it appears everyone wants to replace the US dollar with Euros. “The dollar fell amid news that the United Arab Emirates was diversifying its reserves…” “…the greenback was hurt by a report that the UAE plans to convert eight percent of its foreign-exchange reserves from dollars to euros by late 2007.” "…the statement follows a report late last week that Venezuelan energy minister Rafael Ramirez expressed interest in demanding euros instead of dollars for more of Venezuela's exported petroleum…" "The statements are apparently reviving fears that the dollar is losing its appeal as an international currency." click Wow! That is powerful news reporting! “…the dollar is losing its appeal as an international currency." And more bad news below? “The dollar also had its biggest decline versus the yen this month before a U.S. report that may show consumer confidence fell for a third straight month, fueling bets the Federal Reserve will lower interest rates next year. The U.S. currency has slipped 9.9 percent versus the Euro this year, its first slide since 2004.” “U.S. dollar holdings in global currency reserves are decreasing,'' said Hans Guenter Redeker, head of currency strategy in London at BNP Paribas SA. ``The dollar is going to lose support as we see Fed rate cuts next year.'' click So, where do you put your money in 2007 for the maximum rate of return? Uranium, gold & silver hands down. Uranium “There is little doubt that within the next few years there will be a material advance in the number of operating nuclear power reactors and plans for installing more. The obvious question to ask is – where is all the uranium going to come from?” click Gold & Silver “Once you realize that gold is in a 15-20 year up move very similar to its move of the ‘70s, it becomes possible to calculate reasonable price objectives.” “So for gold to hit $875 in 1980 dollars once again (as a peak price), it will have to reach $3500 in nominal terms.” - Howard Katz click ©
2007 David N. Vaughn CONTACT
INFORMATION The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. Authors of articles or special reports are sometimes compensated for their services. The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
